One of the roles of the ACNC is to provide guidance on its
interpretation of the impact of changes in the law relating to
charities. So far, the ACNC has issued three interpretation
statements and has an exposure draft for another interpretation
statement in train.
Despite the overview of the Office of the Register of Indigenous
Corporations, charities relating to Indigenous
Organisations may be registered and governed by the ACNC.
The unique legal issues in indigenous matters include the
recognition of indigenous disadvantage, the application of the
public benefit test to indigenous organisations and the impact of
the Charities Act 2013, which commenced on 1 January 2014.
The ACNC's attitude to indigenous charities is designed to
complement the "Closing the Gap" strategy. The
Interpretation Statement provides a useful guide to the way in
which the ACNC will approach the question of relief of poverty
generally, not just in respect of indigenous organisations.
Another Interpretation Statement deals with changes in what
constitutes a Public Benevolent Institution. It arises out of the
decision of the Federal Court in The Hunger
Project (PBI). Prior to this decision it was generally
thought that a charity must distribute aid directly to qualify as a
PBI. The accepted view is now that the fact that such an
institution does not itself directly give or provide that relief,
but does so via related or associated entities, is no bar to it
being a PBI. This is in stark contrast to the previous ATO Taxation
Ruling 2003/5 which imposed a "directness" test. The
Interpretation Statement provides a summary of the issues in the
case and how the ACNC will apply the case when making
An exposure draft under consideration by the ACNC relates to
Health Promotion Charities. This is defined as an
institution whose principal activity is to promote prevention
or the control of diseases in human beings. This is a
statutory definition and the ACNC will interpret the words in their
To be a Health Promotion Charity the entity must satisfy all the
elements of the definition. For example it must be an institution,
its activity must it be to promote the prevention or control of
diseases in human beings, (as opposed to injury, accident or a
general health condition or a symptom (unless such a symptom may,
if untreated, may lead to a disease)).
The ACNC states that "promote" would extend to a
charity that, for example, raises awareness about the benefits of
In its first ruling for 2015 the ATO has issued TR 2015/1
dealing with special conditions for tax exempt entities. It focuses
the need to comply with all substantive requirements in its
the application of income and assets solely for the purpose of
what is meant by applying funds solely for the entity's
a discussion of what is an ancillary purpose; and
the manner in which the entity may accumulate income.
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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